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Hospital launches plan to improve financial performance
March 28, 2009

Madison County Hospital's senior leadership team announced Friday it is taking action to secure the hospital's long-term presence in the community. MCH has implemented a plan to insure future success and financial stability in light of the weakening economy impacting many of the nation's hospitals.

The changes include closing the Skilled Nursing and Rehabilitation Unit (formerly known as the Extended Care Unit), outsourcing the business office, and transitioning ownership of the Home Health & Hospice program to Universal Home Health & Hospice, Inc., an independent company which offers similar services in other small communities. Fifty positions have been reduced from the hospital's workforce.

Madison County Hospital, like many organizations across the country, is feeling the aches and pains of the nation's recession. After a very difficult financial year in 2008, the hospital continues to face even greater challenges in 2009.

In a memo to patients and their families, CEO Fred Kolb stated "Our Skilled Nursing Unit has always received high marks from patients and their families. Our staff takes special pride in the outstanding care they provide.

"Unfortunately, the unit is seldom at capacity even though it is very small. We simply do not admit enough patients annually to cover our overhead costs. Closing Skilled Nursing became a difficult, but necessary, business decision."

Transitioning Home Health & Hospice to new ownership was another painful decision for hospital leadership. According to Elaine Ewald, chief operating officer, the hospital had previously worked with Universal Home Health & Hospice, Inc.

Universal knew the hospital's program well. "They were interested in acquiring Home Health & Hospice because of our high quality indicators, the caliber of our staff, and the high reputation our agency has in the community." Ewald noted.

Senior leaders felt Universal's mission and values align well with those of the hospital. Universal provides home care and hospice services in other small communities and can operate with less administrative costs. Universal will maintain local offices for clinical staff and has offered employment to all of the full- and part-time employees from the hospital's program.

"Working with the people at MCH is like being a part of a large family and the decisions incorporated in this plan were very difficult to make," said Kolb. "But we anticipate these changes will insure the long term success of the hospital."

The hospital is also restructuring nursing leadership positions, changing a variety of pay practices, and implementing cost reduction initiatives and new staffing models throughout the organization.

"We are certainly not the only health care organization feeling the affects of the poor economy," Kolb said, citing a November survey by the American Hospital Association which found 59 percent of hospitals were cutting administrative costs, 53 percent were reducing staff and 27 percent were reducing services.

Despite the common belief, hospitals and healthcare are not recession-proof. Declining reimbursement, rising costs, loss of investment income and an increase in uncompensated care are making it ever more difficult for hospitals to be profitable.

MCH will also begin collecting time-of-service co-pays in all appropriate departments, starting with the emergency and outpatient departments. It is anticipated that the changes in processes and staff reductions will result in approximately $1.5 million annually in cost savings.

Most of the changes will take place over the next 90 days. Collection of co-pays will begin immediately. The transition of Home Health & Hospice to Universal Home Health & Hospice, Inc. will be completed by May 1. Although the Skilled Nursing and Rehabilitation Unit will continue accepting new patients until May 1, it will close by June 30.

"The next three to six months will be challenging," said the hospital's Chief Financial Officer Michael Browning, "But when we're through, we'll be better positioned to meet the community's health care needs in a sustainable way."

Last year, MCH began the process of improving the hospital's financial performance. MCH had strong patient volumes in many areas in 2008, but still ended the year with a negative bottom line.

As a result, the hospital asked Insight Health Partners, an independent consulting firm to review the hospital's strategic position as well as develop an analysis of hospital programs and departments. The goal of the review was to identify opportunities to reduce expenses and increase revenues without adversely impacting quality of care, or the hospital's mission, vision and values.

MCH's senior leadership team carefully analyzed the recommendations from Insight to develop a plan for financial improvement. The plan was endorsed by the hospital's Board of Trustees last Thursday.

"No one can know what the future holds for health care," Kolb said. "But we believe the implementation of this plan will put us in a positive financial position for the next several years."

"This is a time to reinvent ourselves," Kolb noted. "The hospital will launch several long-term initiatives to analyze facilities, services offered, physician needs, and the unique healthcare demands of this community. We may develop a new model for the hospital. Constantly evaluating and reviewing national and local healthcare trends and how they impact us will allow Madison County Hospital to continue serving the people who live and work in this area."

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Madison County Hospital
210 North Main Street
London, Ohio 43140
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